Tourism in Colombia: Unions reject tax reform proposal that eliminates VAT exemption for international visitors

A few days ago, the new tax reform proposal presented by the National Government was announced. The document includes an adjustment that, according to experts, could impact the tourism sector: the elimination of the VAT exemption for foreign visitors.

Currently, the Tax Statute grants non-resident tourists an exemption from the value-added tax (VAT) on tourism services provided and consumed in Colombia. However, if the reform is approved, this benefit would disappear, and foreigners visiting the country would have to pay the tax just like national residents.

The official document states that the exemption represents a fiscal expense for the nation and that oversight falls primarily on service providers. It also warns that current processes open the door to improper practices that limit the traceability of transactions and increase the risk of tax evasion.

"This measure seeks to ensure that VAT is applied uniformly and transparently, without disincentivizing international tourists ," the text states.

According to the government, the goal is not to affect the sector's competitiveness, but rather to ensure the principle of VAT neutrality, so that all consumers, both domestic and foreign , contribute equitably for the services they receive in the country.

This Friday, September 5, the Colombian Association of Travel and Tourism Agencies (ANATO) and the Colombian Hotel and Tourism Association (COTELCO) issued a statement against the proposal.

Anato highlighted that the positive trend in tourism in Colombia continues: in the first half of 2025, the sector contributed USD 5.248 billion, an 11.4 percent increase compared to the same period in 2024.

He also highlighted that tourism generates revenue equivalent to 1.95 times that of coffee, 2.2 times that of coal , and 80.8 percent of that of oil. The projection is to close the year with nearly USD 11.1 billion.

“We understand that additional tax revenue and tax equity are needed, but this action is contradictory, just as tourism is consolidating as the country's economic engine , with the inflow of foreign currency. Tourism already competes head-to-head with oil and far surpasses coffee and coal. This is truly a marginal revenue compared to the weight of the tourism sector, and it could jeopardize its growth,” explained Paula Cortés Calle, CEO of Anato.

The association also warned that eliminating the benefit would put Colombia at a disadvantage , as countries like Chile, Peru, and Uruguay maintain a 0 percent VAT rate on tourism services.

Along the same lines, Cotelco stated that its projections estimate significantly lower growth for 2025 compared to last year, ranging from 1 percent to 5 percent. " This slowdown scenario makes the need to maintain tax incentives that strengthen competitiveness against destinations in the region and the OECD even more critical ," the union stated.

Currently, the exemption allows Colombia to compete on equal terms with neighboring countries such as Chile, Peru, Ecuador, and Uruguay, where foreign tourists do not pay VAT on hotels. For Cotelco, removing this benefit would directly increase the cost of accommodation and reduce competitiveness, affecting foreign currency earnings and employment.

The union warns that, in a context of lower expected growth, applying the full VAT rate to accommodation could have an additional negative impact, further reducing visitor flow. This could also have direct consequences, reducing foreign currency earnings and impacting employment.

"It is recommended and requested that the 0 percent VAT exemption for non-resident foreign visitors be maintained as a measure to protect the sector's competitiveness and Colombia's economic development. At the same time, we encourage a re-evaluation of the taxation proposals for other complementary services in the Tourist Accommodation sector and related subsectors," the association concludes.

The dean of the Faculty of Tourism and Hotel Management at Externado University, Clara Inés Sánchez, warned that eliminating benefits at entertainment venues such as Panaca and Parque del Café would also increase the cost of domestic tourism.

"There are more foreign tourists arriving in the country than Colombians traveling within it. This reflects a loss of spending and purchasing power among domestic households ," he noted.

For his part, Gilberto Salcedo, former president of the Colombian Air Transport Association and former vice president of Tourism at ProColombia, agreed that the measure would represent a loss of competitiveness compared to other international destinations that maintain exemptions to attract tourists. He also warned of indirect increases, such as higher transportation costs.

"If we're looking to recover tourism, we need incentives that help leverage that goal. It's not just about maintaining the momentum of international tourism, but also about continuing to promote domestic tourism ," Salcedo concluded.

ANGIE RODRÍGUEZ - TRAVEL EDITORIAL - @ANGS0614